Value
9.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.1 |
| P/S | 10.0 |
| EV/EBITDA | 7.7 |
| Fwd P/E | 9.7 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 6.9x
- ▸PEG: 0.36
- ▸Attractively valued
MLCO · Why this verdict
Why Melco Resorts & Entertainment L (MLCO) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictBUY WAIT
Overall score6.5/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Melco presents a deep-value opportunity at 6.5x forward earnings with a strong recent earnings beat pattern, but both the momentum gate failure and a hard death cross block disqualify new capital deployment until price and trend conditions improve.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock trades at a forward earnings multiple of 6.5x with a PEG of 0.36, implying the market is pricing growth at less than half the multiple typically required to reflect the company's expansion prospects. Valuation breakdown | Forward P/E expands above 10x as earnings power is increasingly recognized over the next 12 months. | →Stable |
| CounterTrough multiples can persist if operating conditions remain fragile; below-average business quality scores and thin margins suggest limited pricing power to sustain current profitability through a downturn. | ||
The underlying franchise scores below average on profitability metrics — thin gross, operating, and net margins — leaving limited cushion if demand softens; with no identified competitive moat, there is no structural floor under earnings. Quality breakdown | Operating income grows more than 25% year-over-year for 2 consecutive quarters, signaling a genuine quality inflection. | →Stable |
| CounterA Piotroski F-Score of 7 out of 9 signals solid balance sheet health and positive momentum in financial metrics, suggesting the franchise may be strengthening even if current profitability remains below peers. | ||
Three of the last four quarters produced earnings that dramatically exceeded consensus, with an average positive surprise of approximately 57%; this magnitude of consistent over-delivery suggests management has performed well ahead of lowered expectations in recent periods. Earnings | EPS surprise remains positive in the next two consecutive quarterly reports. | →Stable |
| CounterThe miss in the oldest quarter was severe (-56.7%), showing earnings can swing sharply in either direction; the strong beat pattern may reflect trough-level estimates rather than durable operational outperformance. | ||
Both the momentum gate (scoring 2.9 against a 4.5 threshold) and the death cross hard block have triggered simultaneously; price is in a confirmed downtrend with the 200-day moving average declining at 6.6% per month and volume distribution turning negative — conditions that disqualify new position entry regardless of fundamental cheapness. Engine gate (failed) | Momentum recovers above 4.5 and price closes above the 200-day moving average for 10 consecutive trading days before the thesis is revisited. | →Stable |
| CounterEarnings beats of the magnitude seen recently can catalyze sharp reversals even from deep technical weakness; a strong quarterly print could compress the gap to the 200-day average quickly. | ||
The stock trades at a forward earnings multiple of 6.5x with a PEG of 0.36, implying the market is pricing growth at less than half the multiple typically required to reflect the company's expansion prospects.
→StableValuation breakdown
- Expectation
- Forward P/E expands above 10x as earnings power is increasingly recognized over the next 12 months.
CounterTrough multiples can persist if operating conditions remain fragile; below-average business quality scores and thin margins suggest limited pricing power to sustain current profitability through a downturn.
The underlying franchise scores below average on profitability metrics — thin gross, operating, and net margins — leaving limited cushion if demand softens; with no identified competitive moat, there is no structural floor under earnings.
→StableQuality breakdown
- Expectation
- Operating income grows more than 25% year-over-year for 2 consecutive quarters, signaling a genuine quality inflection.
CounterA Piotroski F-Score of 7 out of 9 signals solid balance sheet health and positive momentum in financial metrics, suggesting the franchise may be strengthening even if current profitability remains below peers.
Three of the last four quarters produced earnings that dramatically exceeded consensus, with an average positive surprise of approximately 57%; this magnitude of consistent over-delivery suggests management has performed well ahead of lowered expectations in recent periods.
→StableEarnings
- Expectation
- EPS surprise remains positive in the next two consecutive quarterly reports.
CounterThe miss in the oldest quarter was severe (-56.7%), showing earnings can swing sharply in either direction; the strong beat pattern may reflect trough-level estimates rather than durable operational outperformance.
Both the momentum gate (scoring 2.9 against a 4.5 threshold) and the death cross hard block have triggered simultaneously; price is in a confirmed downtrend with the 200-day moving average declining at 6.6% per month and volume distribution turning negative — conditions that disqualify new position entry regardless of fundamental cheapness.
→StableEngine gate (failed)
- Expectation
- Momentum recovers above 4.5 and price closes above the 200-day moving average for 10 consecutive trading days before the thesis is revisited.
CounterEarnings beats of the magnitude seen recently can catalyze sharp reversals even from deep technical weakness; a strong quarterly print could compress the gap to the 200-day average quickly.
Per-dimension breakdown
Quality
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 3.8 |
| Gross margin | 3.6 |
| Op margin | 5.2 |
| Net margin | 2.2 |
| Current ratio | 3.3 |
| Moat | 6.2 |
| Piotroski F | 7.8 |
- ▸Strong Piotroski F-Score: 7/9
Growth
7.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.2 |
| EPS growth | 10.0 |
Momentum
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.6 |
| MACD | 7.2 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -8.6%/30d — confirmed downtrend
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.1 |
| Price target | 8.9 |
| erm sentiment | 3.9 |
- ▸Analyst upside: 34%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.7 |
| quality rank | 4.6 |
| growth rank | 7.3 |
Technical
0.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.4 |
| support resistance | 0.7 |
| 52w position | 1.1 |
Risk (lower is worse)
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 9.6 |
| volatility | 4.4 |
| put call | 10.0 |
| implied vol | 1.5 |
| beta | 9.5 |
- ▸High IV: 71%
Catalyst
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 1 days
How the verdict was assembled
Engine trigger
Earnings in 1 day. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (7)
- MOMENTUM:5.4>=4.5
- ASYMMETRY:1.7>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- EARNINGS_PROXIMITY:1d<=7d
Warning (2)
- MOMENTUM:5.4<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:momentum=5.4>=5.0 recovering
Reward-to-Risk
1.68
Upside
+16.7%
Downside
9.9%
Sizing output
STARTER
SetupRecovery — Death cross but MACD improving, RSI 64
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -44% (>40% off 52w high)
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings in 1 day. Wait until post-earnings. The 10-dimension scores remain Value at 9.0 (strongest), but EARNINGS_PROXIMITY:1d<=7d also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Value at 9.0, Growth at 7.6, and Insider at 7.3; the weakest are Technical at 0.7, Quality at 4.6, and Momentum at 5.4. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 1.68 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Extreme Earnings Beat Pattern
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Deep Value Trough Multiples
Trip ifEPS falls more than 25% year-over-year for 2 consecutive quarters, pushing the effective forward multiple materially higher and undermining the low-multiple premise.
- P3Momentum Death Cross Hard Block
Trip ifPrice closes above the 200-day moving average for 10 consecutive trading days.
- P4Below Average Franchise Quality
Trip ifOperating income grows more than 25% year-over-year for 2 consecutive quarters.